sbishop Posted August 25, 2009 Share Posted August 25, 2009 I have been thinking about adding some racks to my route. I met a guy who has hundreds on racks in dallas and he servcices them on a 3 month cycle or longer. That is something that I can not do with candy. Here is the thing. I went to a pizza location I have and he now has racks nest to my machine. I asked hime what they are paying him. He said 50%. I asked the rack guy what he thought. He said that he tells the locations 50% less the cost of the toys. That ends up being 33%. He said it sound better to say 50% than 33%. I was not wanting to go that high I was hoping to offer 25% Any suggestions? I still have not bought any racks. Link to comment Share on other sites More sharing options...
pdavid Posted August 25, 2009 Share Posted August 25, 2009 50% of net is what I offer. You can try less, but I haven't had any luck going lower. Plus, you have to worry about someone coming in behind you and getting you kicked out when they offer more than you. Link to comment Share on other sites More sharing options...
dperry Posted August 25, 2009 Share Posted August 25, 2009 I have an audio set from Terry Stanley where he talks about how much commission he gives out. He tells the location that he will pay them 50-50 right down the middle. He goes on to say of course since we are paying 50-50, that you mr location owner will be paying 50% of the cost of the goods sold too. I don't have a vast amount of commission locations, but the ones I do, I don't pay more than 25%. I haven't lost a location yet because somebody came in behind me and outbid me. Link to comment Share on other sites More sharing options...
dsimms Posted August 25, 2009 Share Posted August 25, 2009 I have an audio set from Terry Stanley where he talks about how much commission he gives out. He tells the location that he will pay them 50-50 right down the middle. He goes on to say of course since we are paying 50-50, that you mr location owner will be paying 50% of the cost of the goods sold too. I don't have a vast amount of commission locations, but the ones I do, I don't pay more than 25%. I haven't lost a location yet because somebody came in behind me and outbid me. 50% is a lot. in a perfect world vendors should not pay any commission. our machines are here for the convenience of your customers...this is where greed comes in..Ill pay you 25%, then someone says Ill pay you 50% and the next vendor is going to replace him at 60% Link to comment Share on other sites More sharing options...
pdavid Posted August 25, 2009 Share Posted August 25, 2009 i guess it depends on the location. i have an account that grossed $600 last month. They insisted on 50% and I had no problem paying it considering I still make an easy score at that volume. Link to comment Share on other sites More sharing options...
Smiley Posted August 25, 2009 Share Posted August 25, 2009 50% is a lot. in a perfect world vendors should not pay any commission. our machines are here for the convenience of your customers...this is where greed comes in..Ill pay you 25%, then someone says Ill pay you 50% and the next vendor is going to replace him at 60% lol. i like that. actually in a perfect world they would pay us to to put the machines in a store. seriously, 33% of the gross is a very fair to both sides and if you are doing it right you can make good money at 33%. serious questions to those who pay as a percentage of the net. how do you change the percentage if you change the cost of goods? do you recalculate the COGS on a monthly basis? does the location ever ask to see any bills? Link to comment Share on other sites More sharing options...
dperry Posted August 25, 2009 Share Posted August 25, 2009 i guess it depends on the location. i have an account that grossed $600 last month. They insisted on 50% and I had no problem paying it considering I still make an easy score at that volume. Wow! How many products does this location have, and how long does it take you to service the location? Link to comment Share on other sites More sharing options...
pdavid Posted August 25, 2009 Share Posted August 25, 2009 takes about an hr to service. I have a Sports Blaster(25 cents) and Chicken Machine(50 CENTS) that did about the same gross. Also, a 5 way rack and 4 column sticker machine. Link to comment Share on other sites More sharing options...
caserri Posted August 25, 2009 Share Posted August 25, 2009 lol. i like that. actually in a perfect world they would pay us to to put the machines in a store. seriously, 33% of the gross is a very fair to both sides and if you are doing it right you can make good money at 33%. serious questions to those who pay as a percentage of the net. how do you change the percentage if you change the cost of goods? do you recalculate the COGS on a monthly basis? does the location ever ask to see any bills? Good question Smiley. I paid my commission locations this way. (50% of net) I used a ballpark figure of 30% COGs and subtracted that right off the top. That left 35% for each of us. I was very disciplined in my purchases and ensured that I did not exceed 30% COGs. If I found that I just could not buy product at 30%, I simply raised the cost deduction to accommodate that and explained it to the location. Very similar to the way I would raise prices at a full line account. Link to comment Share on other sites More sharing options...
GotLocs Posted August 25, 2009 Share Posted August 25, 2009 Definitely buy racks along with other equipment! It's a great niche in the bulk vending business. Quality equipment bought at a reasonable price can produce not only a good ROI, but also has the possibility of generating considerable gross sales at a single stop...thus better potential for profit than some other choices. You are wise to negotiate the lowest possible commission with stores. Don't pay any attention to the those advising you on rates...plain and simple...the closer to zero the better! There is no industry standard...there is only YOUR standard. If you decide never to pay greater than a certain rate while working on your "pitch" and sales skills you will eventually have a route made up of YOUR standard...voila. I would recommend that you acquire locations with "commissions" as an afterthought, not as a basis (or foundation) of your placement within most stores. Use everything else in your arsenal then, and only then should you discuss commissions....IMHO Link to comment Share on other sites More sharing options...
joebob051977 Posted August 26, 2009 Share Posted August 26, 2009 Wow, this thread really helped me out. I had a location tell me that they want 50% commission. I now understand how I can do it. I would need to tell them that if we are doing 50-50 that they would have to split the GOG 50-50. I would love to get into the restaurant. It is a very busy steak house. Link to comment Share on other sites More sharing options...
dsimms Posted August 26, 2009 Share Posted August 26, 2009 How do locators handle on finding locations for larger size racks? If the business says yes, does the business say, this is what we want in commission of the racks being here?? Link to comment Share on other sites More sharing options...
GotLocs Posted August 26, 2009 Share Posted August 26, 2009 The route operator and site acquisition service agree in advance on commission ranges (and other parameters) that the locator will use as a basis from which to negotiate with the stores. Rarely do the store owners ask for a certain commission, rather, the operators and/or locators offer a certain percentage to the stores to secure a certain amount of space. Link to comment Share on other sites More sharing options...
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